Negative sentiment weighs on global equities

Hi guys, good morning. It's 23rd of October, just gone half 8 here in London. Hope everyone is as happy as I am today. I've got my Arsenal back. 3-1 win at home to Leicester, playing some very, very good football on Wenger's birthday as well. So all is good in London. London is red, but so is the rest of the world. At the moment. Equities down under a bit of pressure this morning. S&P, you can see here, coming down near those lows. The Dow and NASDAQ following suit. But also over in, uh, in Asia as well, you can see here the top left chart, the Nikkei under pressure, pressure, uh, Shanghai comp as well, and the DAX gapping lower with Euro stocks, uh, also sort of following suit there. Um, so reasons for this, well, if we go back just to have a look at the, the S&P and the US equities in general. After the cash open, we found a bit of support before pushing higher. It wasn't really until the morning, uh, that we actually started to come back down. And really led by Asian equities, uh, was this move over the weekend. Also, we had the comments out of China, which really helped to sort of boost, uh, the Shanghai Comp. You can see here the best day for 3 years, we pushed higher, this is my top right chart here. Really pushed on and we've pretty much recovered all of that gain now. Just finding a bit of support, pretty much where we went higher overnight yesterday. So with the policy changes, the income tax cut worth supposedly 1% of GDP, business tax cuts, additional funding for local government, all these positive stories pushing price higher, albeit for it to come down in early trade today. Just the sentiment in global markets still remains uncertain. You know, effectively that can, you know, what you narrow down equity markets to sort of move off the confidence in the markets. And when there's that uncertainty, you have these risks obviously surrounding Italy, the Saudi Arabia situation, Brexit can even creep into, into that as well, the uncertainty of this no deal and and deadlines getting pushed back and back. You've got the Trump elections— we'll come on to some of his comments out overnight— just the unpredictable nature of Trump and what he can do with the midterms coming up. So all these sort of factors weigh in on equities overnight despite the positive lead we had to begin the week over in China. So you can see that really strong push all completely undone now and just albeit having a bit of a respite now. I wouldn't, you know, necessarily go in aggressively short here. I'd prefer to perhaps wait to see how the markets now digest this, that we've got sort of the European markets in full swing. If we have a look at the reaction from this morning, I think quite interestingly as well, you've had gold push higher. The dollar actually did strengthen, uh, during these moves. It seems as though gold is now a safe haven again, maybe temporarily but pushing higher here, uh, quite aggressively. I see a couple of people in the, in the chat took this trade on from the long on R1, and you can see since then it's continued to push higher, and we're now at levels, uh, if we mark it up, pretty much not far away from the high that we had back on the 15th, which would also be the high of the month. So gold catching a bid for the first sort of time off a sort of risk off move in, in a while. You can also see that follow through there. This is dollar-yen, so the yen strengthening here to the downside. So money sort of flying into your sort of safer haven markets. So unusually, for now, gold is sort of, um, you know, pushing higher, even though, uh, in previous times it was moving more of the sort of the strength or weakness of the dollar. Silver following suit as well. However, oil under pressure, probably from that sort of dollar, uh, sort of strength that we had. The currency pairs, however, over the last— well, the major currency pairs, let's say euro and pound, um, over the last sort of 15-20 minutes have just started to recover a bit and looking to just sort of push on here. No real sort of headline out this morning, so I'll just be keeping an eye on these highs that we have sort of trading around here in euro and pound. Actually not too far away from the pivot. Yesterday for both of those pairs, you can see the pound sort of led proceedings, having broken through all sort of morning into the afternoon before trading around the S2 for quite some period of time before just breaking out this morning. The euro as well, playing a bit of catch-up, having broken through. Theresa May did have her speech yesterday. Although nothing really, really doing from that. So more, more sort of focusing here on these pairs. If we were to retrace, I think the pivot looks quite good. The euro as well, if we were to get up to around that area, you would expect quite a bit of resistance. Just on the euro, considering we're on it, I was sending out the sort of the strategy, the weekly strategy that we do here at Amplify. And one of the, uh, the trades that looks to me to be quite interesting, it would be if we were to break this, this sort of trend line that we've got forming here, uh, a breakthrough with that. And I feel, uh, down to sort of 113, low of the year, could come quite quickly. So more trades to sort of wait and see, uh, for those markets, um, in equities this morning, but also for this euro, I feel, as well. If we can break lower through really the, the low that we've got here on the, the month as well, uh, and sort of close below, then it could be a good opportunity, uh, to go short. Uh, having a look at other stories from overnight, so I mentioned Trump, uh, was in the headlines again. Um, let me just drag this over into the chart. One sec. So yeah, Trump promises a new tax cut, uh, vote after the midterms. That's news to Congress. So he did kind of catch people off guard with this when they were interviewed. They kind of just had to go along with what Trump had said, but promising a 10% cut for the middle sort of income tax. So whether that can be passed through or not remains to be seen, but this would obviously normally— you would suggest boost a equity markets and sort of global confidence, but the overriding sort of risk fears at the moment driving markets, and you can see that from this morning. That's really what is the main focus. And going back to the sort of the China situation, you can see this chart here. Let me just move my camera just out the way a tiny bit. You can see yesterday was the sort of the most volatile day, highest since March 2016 for Shanghai comp, more volatile in fact than back in sort of February time when the S&P 500 was coming down. You can see that purple line there. So yesterday, volatility in the markets picking up. It does, you know, feel a bit more like a correction, uh, rather than perhaps a long-lasting move for now. Tech in the, uh, the S&P, and if you look at your NASDAQ chart, we'll go and look at that in a moment, you can see there's sort of more resilient to the pushdown, uh, sort of from the cash open yesterday. You can see tech, uh, sort of holding up, uh, in the green for this chart here, looking at the 500 companies or 505 companies in, in the S&P. So I feel, yeah, okay, the move might be justified and the journos could put their reasons behind it. Um, sentiment obviously isn't great. You've, you know, listed that, we listed those, uh sort of factors earlier— Italy, Saudi, Brexit, Trump midterms. But, uh, you know, it remains to be seen. I think there's still some factors this week and next week for the US with earnings coming out that could prove to be a good buying opportunity. So just having a look at that NASDAQ yesterday, you can see, uh, sort of on that cash open while the Dow and S&P were making their new lows we had the bigger recovery in the NASDAQ and actually pushed on to make a sort of a new high above that R1, whereas you can see the S&P struggled to do so in its recovery. The Dow similar as well. So earnings out this week, Wednesday and Thursday will be important, and like so Wednesday and Thursday next week as well. So we'll come on to sort of the, uh, the earnings for today in the calendar shortly. A couple of sort of key ones for the Dow component, uh, as well. But just something to bear in mind, uh, you know, yes, we have come down quite strongly in, in Asia today, but if we have a look here just at the S&P, it's, it's not the biggest move to the downside, and we have had a tiny bit of a recovery now. Looking at more sort of technically, where would be sort of the point where you could consider going long? Well, if we look at the, the NASDAQ for, for starters, I think you would really want to see that previous low of the day break, which was also the low, uh, following the cash open yesterday. So from a technical point of view, you know, push and break above, uh, this high would be, uh, well, in my view would be, okay, sentiment is improving now. Yes, we had a bit of a correction today, but that's pushed behind us. That holds, and sure, yeah, we can continue, uh, to come down, and, you know, negative comments that also come out in the market would, could, or would and could and should lead to more downside. I think it'll be quite prudent as well if China come out and sort of back their weekend comments up as well in order to sort of boost the market. You know, it was a very big push that we saw Monday morning, and it seems to all be in vain now. But just be something to bear in mind, ears open to sort of to listen for any potential comments that do come out. Similar sort of idea for the Dow in, in terms of that sort of low of the day now where we found really good support, then resistance, break above that and the S1 could, could sort of lead to a change, a change in, in sentiment. Probably getting a trend line on, uh, as well is quite key here. You know, let the market tell you what's going to happen. As long as these, uh, sort of current low, previous lows of the day hold, then sure, look to the opportunity to sell. But if we start pushing above these resistance points, then it does just feel like, uh, buy the dip is still in play. I wouldn't call it panic time yet, you know. If you take us back to, uh, early February, late January, when the markets in the US really started coming down, it felt a bit more of a panic situation than it does now. We've got the earnings to come out, which, uh, we saw could could lead to really positive or, you know, on the same side, negative reactions. But, you know, I feel short-term volatility to the downside, sure, due to the uncertainty. But as these risks perhaps unwind, we may start to see a bit of a recovery. But it would definitely be a case of letting the market tell me rather than just sort of going in now and trying to beat the market, if you like. Just for the S&P, just to clarify this sort of area I'd be looking at. Same for the Dow, same for the NASDAQ. That previous low that we had in early Asian market trade was also then the resistance point. Again, getting a bit of a trend line on as well. So very correlated, those markets. Now the S1, if that breaks, you know, this would be a break of that trend, and there's still not a bad little opportunity to, to get long back to that area as well. If we have a look at the, uh, the DAX, so you can see my bottom left chart, I'm just gonna make this a bit bigger. You can see gapped lower, uh, on, on the open. So I'll be looking to see if we can effectively look to sort of close that gap there on the, uh, the sort of the CFD we got traded here, uh, maybe for a key to see if equities can recover. But as long as these highs, uh, or resistance levels hold in, in US equities, I don't see why we can't continue to come down. Times of interest today, so I mentioned, you know, you want to be, uh, wary of sort of any comments that come out of China, perhaps looking to back their, their sort of stimulus, uh, boosting comments from the weekend. But scheduled releases, if we have a look here, it's going to drag the calendar into picture. It's quiet, quiet day. Not as quiet as yesterday scheduled-wise. I mean, if we go through the morning, it's very, very limited in terms of points that are coming out. I think the, the main highlight of the morning scheduled-wise would be Howard Dane speaking at 11:30. So one of the hawkish Bank of England members. I'd just be listening out for that, not really expecting too much unless they were, you know, a bit more, you know, dovish than expected. Going into the afternoon, obviously you've got your opens and normal times, which can of course provide some volatility. And it is actually on 2:30 where we've got a speaker as well, Fed Kashkari albeit a non-voter. Speaking before we come into sort of the, the data releases, the data to keep an eye on, 3 o'clock at the US you've got the Richmond Fed, and you've also got consumer confidence, uh, out in the EU. You see, last reading was a negative reading, -2.9, whereas in the US we had a multi-year high. So there's that clear shift there between sort of the two countries if you like. 3 o'clock, mentioned that's the, the data. If we go into the afternoon, one to sort of bear in mind for, for cable traders, we had the 11:30, or would have had then the 11:30, Howard Dane. But you've also got Carney speaking at 4:20 on machine learning. That's not necessarily gonna have too many comments. I'm sure he'll have a couple of questions Brexit-related or sort of Bank of England projections going forward before the, the QIR. Um, so would be listening out for that earnings-wise. Mentioned you've got Verizon there, you've got McDonald's, you've got 3M. Uh, some of these companies obviously can move the markets for the Dow Jones, along with Caterpillar as well, to, to be aware of. Um, in, in summary of, of the markets from last night, if I just bring back into picture the, the Asian equities. You can see they're still just finding a bit of support. I feel right now, um, markets are sort of waiting. There is— they're on edge following this move. There hasn't really been a continuation from the sort of volume we see increasing at 8 o'clock here in Europe and then London in particular. Um, so for me, going off that, I wouldn't be too surprised to see a recovery. Would I be buying in right now? No, I'd want to see, uh, say for the S&P, a break above those levels that I mentioned. Even this trend line going, I think, could be a half decent opportunity. If they hold, then sure, sentiment remains to the downside. Looking elsewhere, quite interesting, as I mentioned earlier, gold becoming a safe haven, uh, again moving off that money into sort of, uh, those safer sort of haven products. The Swiss franc catching a bit as well. T-notes actually pushing higher, so yields coming down, which might be a bit of a relief for equities as well. But just coming up to that sort of high of the week there, so we're keeping an eye on gold, how that trades. Oil, uh, data-wise, forgot to mention, but you've got the API as usual, sort of 9:30 slot. We've had, for those that do trade the API, really quite big contrast in the last couple of, uh, sort of readings that have come out in the weeks on weeks. And still with sort of refinery maintenance season you are expected to see build. So any sort of drawdown like we saw last week would move the market, but until we really get a big draw on, uh, your sort of DOE release on the Wednesday, I wouldn't really expect much move to the upside just yet. Where does oil trade? I'll can again put it into the strategy, uh, that we sent out. I think really once we had broken this, uh, quite key sort of technical pattern, uh, last— when it had been last Wednesday, when was the 17th? Yes, on the Wednesday. Yes, you had that breakthrough, then you had the DOE that came out and the surprise, the difference to the APIs that you can see where my mouse is now. Since then it's sort of gone into this range again, um, probably worth getting in these, these new trend lines on as well. Quite clear double bottom as well, so Interesting to see what happens here for, for oil. I think for the short term I favor the downside for a further sort of push down, and we can start to target the levels that we had, uh, back in the beginning, uh, to middle of September. So 67.75 on the futures before perhaps going down to mid-66.5 that we saw the low of September. So favoring the downside. Currency-wise, I mentioned the pound looks quite interesting at the pivot, hasn't quite made its way there. Now we'll come on to sort of how the dollar index is trading in a moment. Uh, the euro, I mentioned the pivot's quite good as well, but just, just briefly, uh, finding a bit of resistance there as well. Aussie dollar has found resistance on the high from last night and the previous low of the morning, so not a bad sort of range trade continuation of this dollar strength from now. Probably got test of this trend line as well come into play. So quite a key area for the Aussie dollar as we're trading. Let me just bring up the, the dollar index on how we are trading, huh? Uh, the dollar index here, you can see, uh, quite sideways at the moment. So in that range, hence why we've sort of seen the euro and the pound push high with the Aussie dollar. So we're looking for a continuation higher if we are to start to, to see these markets reverse. It does feel like they're just finding a bit of resistance, albeit now. I think I just needed to transition the charts there, so I'll just go over the, uh, the S&P levels again here, just with those trend lines. I think if we were to break the, the S1 and that trend line here, then you might get a bit of a respite. But as long as those levels hold, then sure, sentiment to the downside can, can absolutely continue. Comments out of China will be ones to be aware of. Are they going to back their comments from over, over the weekend? Italy situation, how that progresses. This, the dramas in Saudi as well. Any Brexit-related comments. And of course, any further on these Trump sort of new tax cuts and the midterms. I think while those, those factors remain present, then there's going to be that uncertainty. I just think if there was to be more panic, we'd have seen a bigger move come in following this sort of London European Open. But quite interestingly, gold, again, the safe haven. Any questions, as usual guys, please do get them in the chat. Going to be a relatively quiet morning where I would let the, the charts tell you what is going on. Trade what you see, not necessarily what you think. Uh, obviously got the speaker Haldane at 10:30, the main sort of thing to be aware of scheduled-wise. But if anything's to sort of go over the last few weeks, it's more the unscheduled releases that, uh, that really move markets. I think it kicks on tomorrow more. You have the, the Bank of Canada rate decision, which is, you know, basically 97% priced in. So potentially see a reaction there depending on how hawkish or dovish they are in the press conference. They've got the main earnings as well out after close tomorrow and Thursday as well, which could come to the rescue for the US equities. Uh, for now, uh, as well. So hope you all have a good trading day. I'll catch you in the chat and obviously be on throughout the, the morning as well.